Yasser Arafat diverted nearly $1 billion in public funds to insure his political survival, but a lot more is unaccounted for.
Jim Prince and a team of American accountants - hired by Arafat's own finance ministry - are combing through Arafat's books. Given what they've already uncovered, Arafat may be rethinking the decision. Lesley Stahl reports.
"What is Mr. Arafat and the Palestinian Authority worth today?" asks accountant Jim Prince. "Who is controlling that money? Where is that money? How do we get it back?"
So far, Prince's team has determined that part of the Palestinian leader's wealth was in a secret portfolio worth close to $1 billion -- with investments in companies like a Coca-Cola bottling plant in Ramallah, a Tunisian cell phone company and venture capital funds in the U.S. and the Cayman Islands.
Although the money for the portfolio came from public funds like Palestinian taxes, virtually none of it was used for the Palestinian people; it was all controlled by Arafat. And, Prince says, none of these dealings were made public.
"Our whole point is to bring it out of control of any one person," Prince says.
That's what happened with the portfolio money, which is now under the control of Salam Fayyad, a former World Bank official who Arafat was forced to appoint finance minister last year after crowds began protesting his corrupt regime.
According to Fayyad, "There is corruption out there. There is abuse. There is impropriety, and that's what had to be fixed."
Statements like that have earned Fayyad, a bookish technocrat who spent 20 years in the U.S., a reputation for courage - which was enhanced when he immediately posted the details of Arafat's secret portfolio on the Internet.
Fayyad's investigators are treading softly, well aware that their probe may become too embarrassing for Arafat.
Has he tried to stop them? "We run into obstacles in a number of places, particularly among the old PLO types," Prince says, adding one might draw their own conclusions as to whether his statement includes Arafat himself.
Martin Indyk, a top adviser on the Middle East in the Clinton administration and now head of the Saban Center, a Washington think-tank, says Arafat was always traveling the world, looking for handouts. Money, he says, is "essential" to Arafat's survival.
"Arafat for years would cry poor, saying, 'I can't pay the salaries, we're gonna have a disaster here, the Palestinian economy is going to collapse,'" says Indyk. "And we would all mouth those words: 'The Palestinian economy is going to collapse if we don't do something about this.' But at the same time, he's accumulating hundreds of millions of dollars."
The stockpile went well beyond the portfolio. Arafat accumulated another $1 billion with the help of -- of all people -- the Israelis. Under the Oslo Accords, it was agreed that Israel would collect sales taxes on goods purchased by Palestinians and transfer those funds to the Palestinian treasury. But instead, Indyk says, "that money is transferred to Yasser Arafat to, amongst other places, bank accounts which he maintains off-line in Israel."
Until three years ago, Israel put the tax revenues into Arafat's account at Bank Leumi in downtown Tel Aviv, no questions asked. But why?
According to Indyk, "The Israelis came to us and said, basically, 'Arafat's job is to clean up Gaza. It's going to be a difficult job. He needs walking-around money,' because the assumption was that he would use it to get control of all of these terrorists who'd been operating in these areas for decades."
Obviously, that hasn't happened. No one knows this better than Dennis Ross, who was Middle East negotiator for the first President Bush and President Clinton, and now heads the Washington Institute for Near East Policy. He says Arafat's "walking-around money" financed a vast patronage system.
"I used to see that people came in, you know, with their requests," Ross says. "'I need a phone. I need an operation. I need a job.' Arafat had money to dispense."
Like a Chicago ward boss, he still doles out oodles of money; Fayyad says he pays his security forces alone $20 million a month, all of it in cash.
All told, U.S. officials estimate Arafat's personal nest egg at between $1 billion and $3 billion.
Arafat may have $1 billion, but he sure isn't spending it to live well. He's holed up in his Ramallah compound, which the Israelis all but reduced to rubble a year-and-a-half ago. Arafat has always lived modestly, which you can't say about his wife, Suha. According to Israeli officials, she gets $100,000 a month from Arafat out of the Palestinian budget, and lives lavishly in Paris on this allowance.
He also uses the money to bolster his own standing. Both Israeli and U.S. sources say those recent outpourings of support at Arafat's compound were "rent-a-rallies," and that Arafat has spent millions to support terrorists and purchase weapons.
Did he steal from his own people?
"He defines himself as being the embodiment of the Palestinian people," Ross answers. "So what's good for him is good for them. Did they benefit? The answer is no. Did they lose? The answer is yes."
Palestinians certainly paid dearly for something else Fayyad uncovered: a system of monopolies in commodities -- like flour and cement -- that Arafat handed out to his cronies, who then turned around and fleeced the public.
Fayyad says it could accurately be seen as gouging his own people. "And especially in Gaza which is poorer, which is something that is totally unacceptable and immoral, actually."